Cenvat Credits Applicability of Jindal Stainless Ltd on Input used for Electricity generated and sold to HSEB: Punjab and Haryana HC Remands matter to CESTAT [Read Order]
Fuel used for generation of electricity and the electricity diverted/cleared outside the factory is not covered under the purview of eligible inputs defined under Rule 57A of Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 and 2002 applicable during the relevant period and as such credit taken and utilized on fuel used for the purpose other then the specified is recoverable
![Cenvat Credits Applicability of Jindal Stainless Ltd on Input used for Electricity generated and sold to HSEB: Punjab and Haryana HC Remands matter to CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/CESTAT-Cenvat-.jpg "Cenvat Credits Applicability of Jindal Stainless Ltd on Input used for Electricity generated and sold to HSEB: Punjab and Haryana HC Remands matter to CESTAT [Read Order]")
In a recent case, the Punjab and Haryana High Court has remanded the issue on applicability of cenvat credit in case of Jindal steel Ltd on the input used fro electricity generated and sold to HSEB. The issue was remanded back to the Customs, Excise & Service Tax Appellate Tribunal, (CESTAT)New Delhi. Read More: Supplies Amid Imports and IGST over Inter-State Trade &...
In a recent case, the Punjab and Haryana High Court has remanded the issue on applicability of cenvat credit in case of Jindal steel Ltd on the input used fro electricity generated and sold to HSEB. The issue was remanded back to the Customs, Excise & Service Tax Appellate Tribunal, (CESTAT)New Delhi.
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The Commissioner of Central Excise, Commissionerate filed appeal under Section 35(G) of the Central Excise Act, 1944, against the order dated 21.08.2008 passed by the CESTAT, New Delhi. M/s Jindal Strips Ltd., Delhi Road, Hisar ( the Party), is engaged in the manufacture of goods such as Slabs, Blooms, Ingots, HR Strips/Coils of Stainless Steel etc. falling under Chapter 72 of the Central Excise Tariff Act, 1985 and are registered with the Central Excise vide Registration Number.
The party are availing the Modvat/CENVAT Credit facility of duty paid on input/raw materials and Capital Goods. The party have installed a captive power plant for generation of electricity using fuel namely, R.O., R.F.O, H.P.S. and L.D.O. on which they are taking Modvat/CENVAT credit under Rule 57A and 57B of the Central Excise Rules, 1944, Rule 2 and 3 of CENVAT Credit (No.2) Rules, 2001 and Rule 2 and 3 of CENVAT Credit Rule, 2002.
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An enquiry was conducted by the officers of Central Excise. The party produced the permission letter Memo No.210/DB- 33 (3)85/Jindal Strips/Hisar dt 1-10-90 the Secretary, Technical Section, HSEB, Panchkula (Haryana) for parallel operation of their Captive Power Plan with HSEB, Power Grid. On scrutiny of the Permission Letter it was observed by the Central Excise officers that as per Clause0II of the Permission Letter, the Captive Power Plant was synchronized with the HSEB Power Grid on 11KV.
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As per the provisions of Rule 57B of the Central Excise Rule, 1944, 57AA of the Central Excise (2nd amendment) Rules, 2000 and Rule 2(f) of CENVAT Credit (No.2) Rules, 2001 and Rule 2(g) of the Cenvat Credit Rule, 2002, a manufacturer of the final product shall be allowed to take the credit of the specified duty paid on inputs used for generation of electricity or steam used for manufacture of final product or any purpose, within the factory of production.
However, on scrutiny of the records of the Party it was revealed that they have been clearing/injecting some portion of the electricity generated by their Captive Power Plant to HSEB and thereby contravened the provisions of the aforesaid Rules by not using electricity generated by using inputs for the specified purpose on which the party had taken Modvat/Cenvat credit.
It was viewed that fuel used for generation of electricity and the electricity diverted/cleared outside the factory is not covered under the purview of eligible inputs defined under Rule 57A of Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 and 2002 applicable during the relevant period and as such credit taken and utilized on fuel used for the purpose other then the specified is recoverable.
A division bench of Justice Arun Palli and Justice Sudeepti Sharma found that the electricity generated in captive plant was not used in or relation to manufacture of final products within the factory of production but was sold to HSEB whereas Tribunal did not decide this dispute and held that there is no dispute with regard to the appellant receiving same quantity of electricity which was cleared to the Electricity Board, therefore, the issue in dispute was never decided by the Tribunal.
Since the parties agreed in remanding the matter, the court remanded the matter to the Tribunal to decide.
To Read the full text of the Order CLICK HERE
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